FOREX CRUNCH: RBZ blamed as three gold mines suspend operations

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By Business Report

HARARE: Operations at three Zimbabwe gold mines owned by ZSE listed RioZim have been suspended as the company – which also runs the Murowa diamond mine – failed to get foreign currency earnings from gold sales through a unit of the Reserve Bank of Zimbabwe.

RioZim is among the biggest mining companies in Zimbabwe but has been struggling for viability. It has failed to get gold sales proceeds, which it required to pay for imported equipment and production implements.

On Friday the company said it has been “forced to suspend operations across all three of its gold mines pending full payment of its foreign currency proceeds which is required in order to procure the necessary consumables needed to keep gold production” running.

Other gold producers in Zimbabwe that include Metallon have also been struggling, managers from some of its operations said. Falcon Gold has also been encountering foreign currency challenges and this week was suspended from the Zimbabwe Stock Exchange for delaying its financials.

All this may affect Zimbabwe’s targeted gold production of 40 tonnes for 2018 after the country ramped up gold output to 33 tonnes in 2018.

RioZim added: “The Reserve Bank of Zimbabwe undertook to allow all gold producers to maintain 55% of their export earnings in their foreign currency accounts and to increase export incentives on all minerals. The board of RioZim regrets to advise that the Reserve Bank of Zimbabwe has been failing to meet these commitments.”

It further said the company has been experiencing “significant and persistent delays in payment of its foreign currency allocation for deliveries since December 2018” and that this has “severely affected the viability” of its operations.

Although gold miners have been struggling, platinum miners, which include units of Impala Platinum and Anglo Platinum appear to be better off.

Implats spokesperson, Johan Theron recently said by email that: “Both Mimosa and Zimplats receive their revenue in hard currency (US$) and we expect that they will be able to continue using same to sustain the operations in Zimbabwe which will protect them against undue cost escalation.”

However, according to a survey of mining industry executives in Zimbabwe conducted by the chamber of mines, mining managers in Zimbabwe are concerned about the impact of currency shortages in the country.

Zimbabwe Mines Minister, Winston Chitando is drumming up mining firms to raise production and earn the country more foreign currency. 

He has also said the Reserve Bank of Zimbabwe is to fix the foreign currency challenges that miners are facing in the next few weeks although this may be coming late after the shut-down of the three RioZim gold mines.